大象传媒

A fairer society?

• Robert Peston
• 17 Oct 08, 04:30 PM

One of the most striking trends of the past three decades - which became particularly pronounced again in the last few years - has been a widening in the gap between the poor and the rich, with the gap between the very poor and the super-rich expanding at an almost exponential rate since 2003 or so.

Well, in this grim year of serious economic slowdown and rising inflation, our society is becoming more equal again, on most measures of income and wealth gaps.

Part of the reason is that the super-rich have been battered by the turmoil in financial markets and by falls in the prices of shares, commodities, properties and other assets, just like the rest of us.

So investment bankers are lucky if they're still in a job - and bonuses this Christmas will be shrivelled and rare.

There'll be fewer humungous payouts to partners of hedge funds and private equity firms. In fact, with debt so difficult to raise, many of these firms will be lucky to be alive in a year or so.

Also the oligarchs and plutocrats of the newer, faster-growing economies are nursing losses on their exposure to markets, such as the Russian stock exchange, which are melting down.

A duo of oligarchs, who only recently were giants of global capitalism, Oleg Deripaska and Alisher Usmanov, have faced demands from bank creditors to hand over substantial assets (the odds of an Usmanov bid for the Arsenal are now presumably rather longer than they were).

The king of steel, Lakshmi Mittal, is less flush than he was.

And with the oil price having more than halved in just a few short months, there's less wonga bulging in the pockets of the potentates of the Middle East.

So the crunch is coming, later than for most of the rest of us, to the very very top end of income and wealth spectrum (though don't weep too much for them, because most stashed away enough cash in the boom years to weather the storm in some style).

But what about the very bottom?

Well for those in low paid, insecure jobs, the outlook consists of below-inflation pay rises and possible redundancy.

However, if you are living on benefits or you depend on a state pension, there's strikingly good news.

Your state-funding income will rise in line with September's retail prices index or an adapted measure called the Rossi index. And both inflation measures have been rising at a faster rate than we've seen since the early 1990s.

So the RPI, which determines increases in child benefit, incapacity benefit, disability allowance and state pensions, is up 5 per cent.

And income-related benefits (such as housing benefit, income support and jobseeker's allowance) should be increased by the 6.3 per cent increment in the Rossi index.

What that means is that after many years of receiving a smaller and smaller share of the national cake, those who depend on the state for their income will actually receive bigger pay rises than almost anyone else - and their share of national income will rise.

It may seem rather odd that those on benefits tend to do best when the economy is in the pits - but actually that's not unusual (it happened in the early 1990s too). But this time they'll do disproportionately better, because of the inflation we've imported from rising energy and food prices.

So what we're seeing is something of an uplift for those who are poorest, and some of the froth blown off for those with fabulous wealth.

In the middle, however, which is where most of us live and work, it'll be a year of squeezed incomes and fears of redundancy.

So most won't see this narrowing in the gap between rich and poor as a sign that our society is becoming fairer.

PS These increases in benefits and pensions will probably lead to further increase in public sector borrowing. But many economists would see that as a good thing, since the recipients of increased benefits and state pensions usually have to spend the lot just to have a dignified existence - and that additional spending would be good for all of us if it were to inject a bit of extra oomph into a weak economy.

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